Credit Suisse quits prime brokerage under Horta-Osório

Credit Suisse is effectively scrapping its prime brokerage business as Chairman António Horta-Osório overhauls the troubled bank after a series of crises.

Switzerland's second-biggest bank will reduce the size of its investment bank and mostly quit prime brokerage activity for hedge funds. That business was behind $5.4bn of losses from the failure of Archegos Capital.

Horta-Osório, the former boss of Lloyds Banking Group, has been working on plans to reorganise Credit Suisse since joining in April. He announced the plan as Credit Suisse posted a 26% increase in third-quarter pretax profit to SFr1bn, beating market expectations.

The results for the three months to the end of September were boosted by a 3% increase in wealth management revenue and a 10% jump at the investment bank. The bank also released SFr144m of provisions for credit losses.

Credit Suisse said it had recovered $257m of its Archegos losses, which were the worst among a group of international banks that lost more than $10bn in total when the fund collapsed. Its remaining prime broking activities will be niche services for ultra-rich clients in Asia.

"Risk management will be at the core of our actions, helping to foster a culture that reinforces the importance of accountability and responsibility," Horta-Osório said.

As he did with the PPI scandal at Lloyds, Horta-Osório has been settling with regulators to draw a line under past problems. Credit Suisse said it had set aside SFr564m linked to various historic matters including investor losses from the collapse of Greeensill Capital.

The bank's capital strength increased as the common equity tier 1 ratio improved to 14.4% at the end of September from 13.7% three months earlier.